ePolicy News August 2014

FEDERAL

On July 31, the
U.S. Food and Drug Administration (FDA) notified Congress of its plans
to release the long-awaited draft guidance for the regulation of
laboratory developed tests (LDTs).
With this notification,
the FDA released a preview of the draft guidance. The
Agency will
formally publish its draft guidelines for public comment after 60 days.
In addition, the Agency released a final guidance on the development,
review, and approval of companion diagnostics.

“With today’s notification of the Agency’s intent to issue the
lab-developed test draft guidance, the FDA is seeking a better balanced
approach for all diagnostics,” said Jeffrey Shuren, Director of the
FDA’s Center for Devices and Radiological Health. “The Agency’s
oversight would be based on a test’s level of risk to patients, not on
whether it is made by a conventional manufacturer or in a single
laboratory, while still providing flexibility to encourage innovation
that addresses unmet medical needs.”

As anticipated, the preliminary details of the draft indicate the FDA’s
intent to implement a risk-based approach for LDT oversight. Moderate
to high-risk assays will be subject to premarket review as well as
registration, listing, and adverse event reporting requirements. The
highest-risk diagnostics will have to begin meeting premarket review
requirements 12 months after the final guidance is released, with the
remaining high-risk tests will be phased in over four years.
Laboratories offering LDTs deemed to be moderate-risk will have to
begin registration, listing and adverse event reporting six months
after the guidance is finalized.

Oversight of these diagnostics has been the subject of much debate in
the laboratory community for many years, with some charging that the
FDA lacks the legal authority to regulate LDTs. With the passage of the
Federal Food, Drug, and Cosmetic Act (FDCA) and Clinical Laboratory
Improvement Amendments (CLIA), the U.S. Congress established provisions
for the oversight of various aspects of laboratory medicine. Passage of
the Medical Devices Amendments Act in 1976 granted the FDA jurisdiction
over commercially distributed test kits as in-vitro diagnostic devices.
The FDA claims the statute also grants them jurisdiction over the
regulation of LDTs. The FDA plans to continue its practice of enforcement discretion with
regard to LDTs for rare diseases and unmet medical needs. Premarket or
quality systems review will not be required for these types of assays,
however, laboratories will have to register and list them.

Appropriate regulation of LDTs is a high priority issue for ASCP to
ensure that only high quality, clinically and analytically valid
diagnostic laboratory tests are offered to patients. Out of
concern for patient safety and quality laboratory testing, ASCP
developed a policy statement on the
regulation of LDTs.

OIG Report Suggests More than 20 Percent of Medicare Lab
Claims are “Questionable”

On July 9, the U.S. Department of Health and Human Services Office of
the Inspector General released a report suggesting that as much as
20 percent of Medicare clinical laboratory claims are “questionable.”
The report raised concern about $1.7 billion of the $8.2 billion
reimbursed by Medicare for services on the Clinical Laboratory Fee
Schedule (CLFS) in 2010. That’s more than 20 percent of the total
amount paid by Medicare for its 2010 CLFS claims.

The OIG reviewed Medicare claims data from 2010, utilizing 13 screening
measures to identify potentially questionable billing practices. Of the
95,000 laboratories examined in the study, OIG indicated that “over
1,000 labs exceeded the thresholds…for five or more measures of
questionable billing for Medicare lab services.” OIG also stated that
“almost half of the labs that exceeded the thresholds for five or more
measures of questionable billing—compared to 13 percent of all
labs—were located in California and Florida, areas known to be
vulnerable to Medicare fraud.” In total, OIG identified 32.9 million
claims for laboratory services as questionable.

It must be emphasized, however, that exceeding the threshold of the OIG
measures does not necessarily mean that the laboratory’s billing
practices are inappropriate or fraudulent. Indeed, OIG noted as much
when it acknowledge that it “did not independently verify the accuracy
of the data used for this study.” That said, ASCP is concerned about
the report, its implications, and some of the measures used to identify
questionable billing practices. For example, the single biggest finding
($1.2 billion of the $1.7 billion), in terms of quantifying the cost of
potentially inappropriate claims, related to “claims with beneficiaries
who had no associated Part B service with the ordering physician within
six months prior to the lab service.” Many of these claims, however,
could relate to testing performed the day of, or in advance of, a
physician visit. Further, patients with chronic conditions requiring
routine monitoring, such as for patients requiring blood glucose,
prothrombin time, lithium testing, etc., could seemingly run afoul of
OIG’s screening criteria.

ASCP Briefs CMS on CLFS Re-pricing, New Test Pricing
Recommendations

On July 14, ASCP outlined its initial recommendations on
revaluing the Clinical Laboratory Fee Schedule (CLFS) and for pricing
new laboratory CPT codes to the Centers for Medicare and Medicaid
Services (CMS). During a CMS public forum, ASCP Past President Lee H.
Hilborne, MD, MPH, FASCP, DLM(ASCP)CM, presented
ASCP’s recommendations
to CMS.

The Protecting Access to Medicare Act (PAMA) (P.L. 113-93) requires CMS
to re-price the entire CLFS (See Section 216, pp. 15-23). In a
nutshell, PAMA requires laboratories to report data on private payor
payment rates and the corresponding test volume every three years. The
statute exempts providers from reporting bundled and capitated data and
requires payment rates to reflect discounts, rebates, etc. CMS will
then use the data to calculate a payment rate, based on the weighted
median for each test submitted. CMS is required to release final
regulations implementing the data reporting requirement by June 30,
2015. Congress mandated that laboratories begin reporting this data on
Jan. 1, 2016.

ASCP commented that the revaluation will result in in “the most
significant changes in the way laboratory tests are reimbursed by
Medicare since the creation of the Clinical Laboratory Fee Schedule
(CLFS) in 1984.” ASCP urged CMS to structure the reporting requirement
in a manner that would minimize the associated regulatory burden as
well as the potential penalties for non-compliance. Dr. Hilborne noted
in his comments that sampling laboratories, rather than requiring all
labs to report data, could allow CMS to greatly reduce the overall
regulatory burden associated with revaluation. ASCP also urged that CMS
give laboratories at least six months to report data, as the reporting
requirement will like prove extremely complex for laboratories to meet.

ASCP also urged CMS to collect data from all major market sectors
(hospital labs, reference labs, physician office labs, etc.) for
laboratory services and that the data be adjusted to reflect each type
of laboratory’s related market share. With concerns that hospital
laboratory payment data may be under represented in the data, ASCP is
urging CMS to weight the data to reflect hospital laboratories'
applicable market share. Since payment rates for hospital laboratories
tend to exceed payment rates for reference laboratories, there is a
concern that the underreporting of hospital laboratory data would put
increasing financial pressure on hospital laboratories. For a copy of
ASCP’s full comments on the CLFS revaluation, click here.

In addition to commenting on the PAMA revaluation, ASCP provided the
agency with recommendations on pricing over 100 new CPT codes on the
CLFS for CY 2015. A copy of ASCP’s recommendations on this aspect of
the public meeting can be obtained on page 4 of this document.

OIG aims to eradicate
financial incentives tied to referrals in an effort to secure patients
an active role in their medical decision-making and uphold the
integrity of the Medicare program

On June 25, the U.S. Department of Health and Human Services Office of
Inspector General (OIG) issued a Special Fraud Alert entitled
“Laboratory Payments to Referring Physicians.” Unlike Advisory
Opinions, the OIG very rarely releases Special Fraud Alerts, which are
reserved for addressing national-level trends in healthcare fraud
rather than specifically-reported incidences. Hence, given that the OIG
has not released a Special Fraud Alert targeting the
laboratory industry since 1994, the federal agency is sending a very
strong cautionary message with its release of this recent alert.

In particular, the OIG’s June 2014 alert addresses two types of
compensation arrangements between clinical laboratories and referring
physicians or physician groups believed to present a substantial risk
of fraud and abuse under the federal Anti-Kickback Statute (AKS): (1)
Blood Specimen Collection Arrangements and (2) Registry Arrangements.
The AKS makes it a criminal offense to knowingly and willfully offer,
pay, solicit, or receive any remuneration to induce or reward referrals
of items or services payable by a federal healthcare program. Hence,
under the AKS, liability may fall on either the referring provider and/or the referral-based laboratory and may result in up to a $25,000
fine, exclusion from federal healthcare programs, and/or imprisonment
for up to five years for either or both parties.

Blood-Specimen
Collection, Processing, and Packaging Arrangements

OIG’s Special Fraud
Alert first addresses arrangements in which
compensation is paid by clinical laboratories to referring physicians
(or physician groups) for blood specimen collection, processing, and
packaging services. Under current law, the individual that collects the
specimen is permitted to bill Medicare for a nominal specimen
collection fee under certain circumstances, such as when the blood
sample is obtained via venipuncture (CPT Code 36415). Additionally,
Medicare only allows such billing practice when it is the custom
practice, both at the local- and provider-level, for the physician to
bill separately for specimen collection. Only one collection fee is
permitted for each type of specimen for each patient encounter,
regardless of the number of specimens drawn. Medicare also reimburses
specimen processing and packaging for transport through a bundled
payment (via CPT code 99000).

Nonetheless, though billing separately for these services is allowed by
Medicare in certain circumstances, this does not mean that these
circumstances are exempt from further scrutiny. Accordingly, the OIG
identifies these arrangements as especially vulnerable to fraudulent
activity, thereby necessitating the need to assess their “lawfulness,”
which is to be determined based on the perceived intent of both parties
involved. As such, the OIG provides the following examples of
arrangements with potentially enhanced likelihood of “unlawful purpose”:

Payment to physician exceeds fair market value

Payment to physician is duplicative of third party
(Medicare) reimbursement

Payment is made directly to the ordering physician, rather
than the physician’s group practice

Payment is made on a per-specimen basis during a single
patient encounter

Payment is directly tied to volume (i.e. made on a
per-test, per-patient basis)

Payment is conditional on type, volume, and/ or panel of
tests (regardless of medical necessity)

Payment is made to physician even though the clinical lab
provides the performing provider

Registry
Arrangements

OIG’s Special Fraud Alert
also addresses arrangements in which compensation is paid by clinical
laboratories to referring physicians or physician groups for submitting
patient data to a registry or database. Just as separate billing for
blood specimen collection is not prohibited under Medicare, the AKS
does not prohibit laboratories from engaging in or compensating for
legitimate research activities (via registries). However, due to the
nature of referrals, even retaining an Institutional Review Board (IRB)
does not entirely exempt registry arrangements from additional
scrutiny. Accordingly, the OIG provides the following examples of
arrangements with potentially enhanced likelihood of “unlawful purpose”:

The lab requires physician to order tests with a stated
frequency for adequate data collection

The lab pays and collects data from physicians based on
referral volume, rather than data type

Though the arrangements identified above are in reference to
the
unlawful purpose behind referrals for federal healthcare program
beneficiaries, the OIG cautions that arrangements in which such
beneficiaries are “carved out” will be equally suspect. This is because
many physicians have the incentive to minimize reference laboratories
for administrative efficiency and convenience factors. Hence, it is
nearly impossible to detach financial incentive for the referral of
privately-insured beneficiaries from the referral of Medicare
beneficiaries. Accordingly, ASCP encourages all clinical labs
to
closely examine all of their referral-based relationships with
physicians to ensure that financial interest is not in any way
underlying referral decisions. Additionally, in the closing remarks of
its Special Fraud Alert, the OIG encourages the pathology and
laboratory community to report any suspected fraud, regarding these or
other issues, via the OIG Hotline at
https://forms.oig.hhs.gov/hotlineoperations/
or by phone at
1-800-447-8477 (1-800-HHS-TIPS).

While ASCP is pleased that USPTO acknowledges the Court’s rulings and
is attempting to offer clarification for patent practitioners, the
Society joins AMP and others in urging th Agency to specify that
patent claims that attempt to assert ownership over natural products,
natural laws, natural principles of products of nature are now
ineligible for patenting. Furthermore, applications that attempt to
claim the associations between genetic changes and physical
characteristics or physiological effects, whether through process
claims that in effect claim these natural relationships, or through
claims on the gene sequences themselves are also ineligible for patent
consideration.

ASCP was a plaintiff in the Myriad case which challenged Myriad
Genetics’ right to patent BRCA1 and BRCA2. The Supreme Court ruled
unanimously last year that human genes, including isolated genes, are
products of nature and, therefore, ineligible for patenting.

PRACTICE

Palmetto’s Practice Guidelines: Safeguarding Professional
Integrity or Infringing upon Professional Autonomy?

ASCP
wants to hear what YOU think as Palmetto walks the fine line between
“Guard against Fraud” and “Gatekeeper of Coverage” for special stains
and IHC services.

This May, Medicare Administrative Contractor (MAC) Palmetto GBA
released two educational “covered tests” postings which established
“Special Stains and Immunohistochemistry (IHC) Indications for Gastric
Pathology” as well as “Immunohistochemistry Indications for Breast
Pathology.” Within the postings, Palmetto assigns responsibility for
the ordering of special stains and IHC to the pathologist and asserts
that standing orders for these services are not “reasonable and
necessary.” It further expands upon the clinical indication
specifications for what is considered “reasonable and necessary” when
performing these services, specifically on gastric biopsies and breast
specimens. (See Reference Chart Below.)

Special Stains and
IHC on Gastric Biopsies

Special Stains and
IHC on Breast Specimens

Specifies that it is NOT “reasonable or necessary” to:

Perform special stains when looking for intestinal metaplasia

Order a special stain or IHC to look for Helicobacter species

Perform special stains and/or IHC on greater than 20 percent of gastric biopsies

Clarifies that it will restrict reimbursement by:

Only paying for ER, PR and Her-2/neu IHC stains on breast specimens and specimens which contain breast cancer metastases

No longer reimburse for other biomarkers such as Ki-67, PI3K and gene expression assays

ASCP anticipates that it may be our members’ initial instinct
to assess whether or not the coverage policies introduced via
Palmetto’s recent postings are clinically sound. The Society
understands this initial instinct and is, thus, also currently
assessing whether or not we support these specific clinical
indications. However, ASCP encourages our members to first take a step
back and consider the broader picture when assessing the full scope of
Palmetto’s recent postings.

Do You Agree
with the PURPOSE behind these postings?
The frequency limitations specifying the appropriate range of special
stains and/or IHC to perform on gastric biopsies is intended by
Palmetto to mitigate the unnecessary and overutilization of these
services indicative of fraudulent activity. ASCP appreciates Palmetto’s
attempt to narrow its target when attempting to combat fraud so that
pathologists who are not guilty of fraudulent behavior do not necessarily have to
be subject to CMS’s punishment intended for those that are guilty.
However, MACs’ current protocol for assessing whether or not a given
service is “reasonable and necessary” typically takes into
consideration the uniqueness of the patient condition; whereas, a
standard utilization threshold does not. Accordingly, many are
concerned that pathologists may be forced to adhere to a 20-percent
threshold, even when their patient population (test results)
necessitates a higher percentage of necessary special stains and/or
IHC. While Palmetto cites examples of when ancillary stains are
appropriate in its postings, it does not directly address how
pathologists with a patient population that clinically requires the
performance of special stains and or IHC on greater than 20 percent of
gastric biopsies will fare, should they exceed the threshold in order
to best serve their patients’ needs. Additionally, Palmetto does not
explain what “additional action” they will take in the case of a
pathologist’s failure to adhere to this threshold. However, ASCP
anticipates that possible actions may include: a MAC probe, pre-payment
review, post-payment review, RAC audit, or ZPIC audit.

Do
you agree with the PROCESS by which Palmetto specified these practice
standards?
It is important to clarify that, in further specifying the clinical
indications for the “reasonable and necessary” performance of special
stains and/or IHC, Palmetto is inadvertently specifying the conditions
under which Medicare will or will not reimburse for these tests. Though
it is within a MAC’s authority to specify conditions for coverage, this
is typically done through the MAC’s Local Coverage Determination (LCD)
process, which enables multiple mechanisms for stakeholder input.
Accordingly, many within the laboratory community are caught off guard
that Palmetto did not opt to go through the LCD process. Those
concerned are left questioning whether the MAC is over-exerting its
authority by circumventing a process that would require it to seek
clinical expertise from the laboratory community when establishing
practice standards.

However, should Palmetto opt to go through the LCD process regarding
these practice guidelines, it should be considered that the MAC would
then have the ability to set up an auto-denial process for special
stains and/or IHC exceeding the 20-percent threshold. Also through the
LCD process, Palmetto could require pathologists to provide extensive
documentation supporting the medical necessity of each individual
service exceeding the specified threshold. Nonetheless, it should be
noted that the Patient Access to Medicare Act will begin requiring that
MACs go through the LCD process when issuing coverage policies
beginning in CY 2015.

There are a lot of moving pieces to consider when assessing whether or
not ASCP supports Palmetto’s actions entirely or in part. However, one
thing is for certain: If
we do not establish our own practice guidelines, others may do that for
us. Accordingly, ASCP strongly asserts that it is
inappropriate for any third party (i.e. MACs, private insurers, the
Federal government, etc.) to exclude members of the laboratory
community, with the necessary clinical expertise, from this important
process. Though practice standards may not be appropriate for all tests
as we move further into an era of personalized medicine, they remain
extremely important for others. Practice standards can serve not only
as the most appropriate regulator of medical necessity, but also as
powerful tools for mitigating fraudulent overutilization and solid
foundations for quality indicators. ASCP directs our members to the ASCP-led Choosing Wisely Initiative and Intermountain Health’s program
as excellent examples of pathologist-led efforts to assess clinical
utility, reinforce appropriate utilization of laboratory tests, and
create a solid foundation for the development of meaningful practice
standards.

Now,
ASCP wants to hear from each of YOU regarding whether or not you think
Palmetto has the best interest of the laboratory or is simply a “fox
guarding the hen house” regarding its recent postings specifying
practice standards. Join
fellow members in an ongoing discussion around this complicated and
controversial topic by entering ASCP’s OneLAB community forum chat room
here.

Section 5 of the Federal Trade Commission (FTC) Act provides the
Commission with authority over data security issues. This authority was
intentionally made broad by Congress to keep pace with rapidly changing
digital technologies. One aspect of the Commission’s authority is the
“Reasonableness Standard” used to assess grievances in the private
sector. Committee Chairman Darrell Issa (R.-Calif.) pointed out that
this standard is very hard to adhere to due to the lack of written
regulations, arguing that the Commission’s reliance on “industry
standards” can be arbitrary.

The Oversight Committee addressed allegations of conflict of interest
involving the FTC through two witnesses whose companies were the target
of FTC actions. The witnesses addressed concerns related to Tiversa, a
P2P (peer to peer) intelligence and security company. Michael
Daugherty, CEO, LabMD, and David Roesler, Executive Director, Open Door
Clinic of Greater Elgin, were supposedly contacted by Tiversa who had
acquired sensitive patient data from their systems. According to
Daugherty’s testimony, in November 2008 after repeatedly refusing their
services, he received a call from Tiversa notifying him that they were
turning the files they had acquired over to the FTC. In 2010, Daugherty
received an inquiry from the FTC which would eventually escalate into a
fully-fledged legal battle. The Open Door clinic of Elgin
encountered a similar situation in July 2008. In this case, the
Clinic’s clients were solicited to join a class-action lawsuit alleging
a breach of patient data. The lawsuit was initiated after Tiversa said
it had acquired Open Door’s patient data. The class-action suit was
apparently settled out of court.

As a patient-centered organization, ASCP is concerned about the
security of patient information. It is worth noting that both LabMD’s
and Open Door clinic’s security breaches were traced to P2P software,
such as Limewire, which had been installed on both companies’
computers. ASCP urges all clinical laboratories to carefully review
their information technology systems to ensure the security of patient
healthcare and other sensitive data. As technology
progresses, it is important to err on the side of caution to avoid
security breaches and to be mindful of the appropriate requirements.
Meeting HIPAA’s requirements may not satisfy the FTC’s “Reasonableness
Standards.”

Individuals interested in viewing the hearing in its entirety along
with written witness testimonies on the OGR website.

Protecting Patient Information Key to Healthcare
Transformation

ASCP attended a Health
Affairs briefing on July 9 at the National Press
Club in Washington, D.C., which gave an overview of “Big Data,” as it
pertains to healthcare. This event addressed the obstacles that need
to be surmounted before big data can be utilized to its full potential.

For those unfamiliar with the concept of “Big Data,” it is simply
defined by Webster’s Dictionary as, “Data sets that are too large and
complex to manipulate or interrogate with standard methods or tools.”
Joachim Roski, PhD, MPH, of Booz Allen Hamilton, believes that this
definition was an oversimplification and Big Data should be broken up
into three main categories: Volume, Velocity, and Variety. To
summarize, Big Data is an immense and diverse collection of information
that can be accessed and analyzed swiftly. With this, companies like
Amazon and Netflix can provide recommendations, based on the
information they have collected from their entire consumer base. In
time, the hope is that the healthcare industry will fully embrace Big
Data to provide faster, more accurate counsel. Before this end goal can
be reached, however, numerous setbacks need to be overcome, including
additional research and development, capital acquisition (both monetary
and intellectual), and regulatory roadblocks.

The take-away from the briefing was that in order for the integration
of Big Data in a clinical setting to be successful, three main things
need to occur. Primarily, it requires backing and cooperation from the
entirety of the healthcare community, from patients to the FDA.
Subsequently, the concern about data security and privacy needs to be
addressed. Finally, the infrastructure that gets developed to handle
the data needs to be self-sustaining. The first point was covered by
numerous experts who were concerned with the developing culture of data
hoarding within the industry. The latter two concepts come from I.
Glenn Cohen, Professor of Law and Director at the Petrie-Flom Center
for Health Law Policy at Harvard Law School, and Harlan M. Krumholz,
MD, Professor of Medicine at Yale University School of Medicine. Both
Cohen and Krumholz acknowledge that the privacy of patient information
is a sensitive issue. The consent process, in regards to the right to
use to this information, is more sensitive still. However,
they believe it is not feasible to explicitly request consent from each
individual patient. Both stand firm in their belief that for Big Data
in the healthcare sector to progress, there needs to be access. In
order for this to be implemented properly, certain policies need to be
adapted and others will need to be adopted. Conceptually speaking,
there needs to be a less robust consent process and a more robust
oversight body. The recommended course of action consists of creating
an oversight body and educating the public that their medical
information will stay safe and anonymous. Dr. Krumholz’s final point
addressed the sustainability of the system. No one within the industry
is going to want to funnel money into this system to keep it running.
As a result, the infrastructure that is developed needs to be
inherently sustainable so that it can keep adapting to the rapidly
growing wealth of information being put into it.

The adoption of Big Data is in its early stages, with organizations
having smaller frameworks within their own institutions. This
conference called for organizations to open their doors to
collaboration and embrace this new technology with open arms. There are
still a lot of problems that have gone unaddressed or are up in the
air. Dr. Krumholz admits that he is a bit of a dreamer, but he firmly
believes that solutions will be found once the community agrees to
throw themselves behind the idea. Through the briefing, privacy,
security, and reservation to change were fundamental issues brought up.
As it stands, a lot of work needs to be done to smooth them out. But
once they are, Big Data will fundamentally change the world of health
care.

ASCP will remain vigilant to areas involving patient privacy,
especially when it resides in developing health information
technologies. Additional information covering ASCP’s stance on this
issue can be found here. A full recording of the
briefing is available on the Health
Affairswebsite.

Milken
Institute Reports Positive Economic Impact of Medical
Technologies Over Next 25 Years

The Milken Institute released a report last month forecasting the
potential economic impact of medical technologies that treat diabetes,
musculoskeletal disease, colorectal cancer, and heart disease. It
included both the direct costs and indirect benefits of using each.
These indirect benefits can include not only the increased productivity
of a healthier patient, but also the increased productivity of those
family members, or other informal caregivers, who no longer have to
care for the patient. The estimated net annual benefit from the four
diseases studied is $23.6 billion in 2010 and would lead to an
aggregate growth of $1.4 trillion in the next 20 years.

While the Milken Institute did not offer any suggestions on the
regulatory measures that could help to foster increased incentives, the
panelists at the report’s briefing spoke to potential roadblocks and
solutions on a policy level. Jim Blankenship, MD, Director of the
Department of Cardiology at the Geisinger Medical Center, suggested
that before any regulatory action could take place, the scope of a
dynamic economic impact study needed to be expanded and more
generalized, beyond these four diseases. Further, Ross DeVol, Chief
Research Officer at the Milken Institute and co-author of the study,
remarked on how hard it is to get CBO to use methods that are more
dynamic, because of the strictness of the economic tools they are able
to use.

Mr. DeVol and Jeff Hitchcock, the President and Founder of Children
with Diabetes, both argued that changes should happen within the FDA,
specifically in how quickly they are able to process and review new
technologies.

This study emerges alongside a national conversation being held in the
Health Subcommittee of the House of Representatives’ Energy and
Commerce Committee, led by Subcommittee Chairman Joe Pitts (R-Pa.) and
Chairman Fred Upton (R-Mich.), and known as 21st Century Cures.
Six hearings have been held by the Subcommittee, including one on
Tuesday, July 22, 2014, which focused on the barriers to developing new
technology (e.g. information silos in the industry and the cost of
running trials in the U.S.). Members of Congress and medical
professionals alike called for incentives that would improve turnaround
between a drug’s or device’s creation and it becoming available to
patients, with enhanced post-market surveillance.

WORKFORCE

The U.S. needs to significantly reform the federal system for
financing physician training and residency programs in order to ensure
that the public’s $15 billion annual investment is producing enough
doctors to meet the nation’s healthcare needs, according to a new
report from the Institute of Medicine (IOM). The report,Graduate Medical Education That Meets the Nation’s Health Needs, claims that current
financing, provided mainly through Medicare, requires little
accountability, allocates funds independent of workforce needs or
educational outcomes, and offers insufficient opportunities to train
physicians in the healthcare settings used by most Americans.

Despite a looming physician shortage and stakeholder calls for
additional Medicare funding for residency and fellowship slots, the new
report recommends Medicare funding remain at its current level.
However, the report recommends that the U.S. Health and Human Services
(HHS) establish a two-part governance infrastructure in which a
Graduate Medical Education Policy Council within the Secretary’s Office
at HHS that would oversee policy and decision making, and an office
within the Centers for Medicare and Medicaid Services (CMS)
that would oversee fund distribution. Medicare support would be
provided through two distinct channels—an operational fund to finance
ongoing residency training and a transformational fund to finance new
training slots as needed, provide technical support, and research and
innovative pilot programs.

The report also urged that funding be distributed directly to
organizations that sponsor physician training programs, in order to
encourage opportunities at a variety of sites, using a single,
national, per-resident amount. A 10-year transition period to fully
implement the recommendation was suggested, given the complexity of the
proposed GME financing system.

The study was conducted by the IOM Committee on the Governance and
Financing of Graduate Medical Education and was funded by multiple
health foundations, the Health Resources and Services Administration,
and the U.S. Department of Veteran Affairs.

VA Physician Scarcity Indicative of Industrywide Shortage

ASCP attended a congressional briefing hosted by the American
Association of Medical Colleges (AAMC) on July 17 at the Capitol
Visitor Center. The purpose of this meeting was to raise awareness in
Congress of the ever-growing physician shortage in the Veterans
Administration (VA). A large number of factors contribute to this
issue; however the AAMC’s recommended course of action for some short
term relief was for Congress to co-sponsor and sign into law one of
three bills.

AAMC has had a symbiotic partnership with the VA for nearly 70 years
and is committed to remedying the physician shortage. This shortage
will not remain within the VA for long though. As Patrick Brunett, MD,
Associate Dean of the Oregon Health and Science University (OHSU)
School of Medicine, pointed out, the VA is a microcosm for the
healthcare sector as a whole. It will be the first to experience
shortages, but other organizations will suffer the same fate if action
is not taken soon.

Fortunately, the first couple of steps have already been taken. A few
years ago, AAMC called for medical schools to increase their acceptance
rate and class sizes. Schools responded and a projected 30
percent-increase in graduating class size is expected by 2016. This
being said, more than 5,000 of these graduates will not be placed in a
residency program due to the residency cap in place. The solution to
this lies within The Resident Physician Shortage Act of 2013 (H.R. 1180), Training Tomorrow’s
Doctors Today Act (H.R. 1201), and The Resident
Physician Shortage Reduction Act of 2013 (S. 577). Any of these bills would
increase the residency cap by 15,000 by 2019 and, in turn, increase
Direct Graduate Medical Education funding.

Even if only one of these bills is signed into law, the quantity of
practicing physicians will not meet the industry’s demand. According to
AAMC estimates by 2020, America may face shortages of 45,000
primary care physicians and 46,000 surgeons and medical specialists.
AAMC urged Congress to pass any of these bills, but warned that it is
not a permanent fix by any means. Further GME funding and additional
residency positions will still be required given America’s growing
elderly population.

ASCP’s focus on this topic will continue as the issue develops. We will
also remain alert to other difficulties that may arise regarding GME.
For ASCP’s stance on GME and GME funding click here.

Additional information from the AAMC concerning this issue is available
here.

GLOBAL HEALTH

U.S. Support the Key to Achieving an AIDS-Free Generation

ASCP joined fellow member organizations of
the Global Aids Policy Partnership (GAPP) in thanking the
chairs and ranking members of both the U.S. Senate and U.S. House
State, Foreign Operations and Related Programs Appropriations
Subcommittees for their unwavering bipartisan support of sustained
funding levels for global HIV/AIDS programs for FY 2014. GAPP is a
coalition of advocacy and implementing organizations committed to
ending AIDS for the next generation by expanding and improving global
HIV and AIDS programming.

ASCP and the GAPP also urged the leadership, as they work to finalize
FY 2015 funding legislation, to maintain the amounts appropriated for
the Global Health Programs–State account that funds the President’s
Emergency Plan for AIDS Relief (PEPFAR) and the U.S. contribution to
the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund)
at the levels included in the House committee mark: $4.32 billion and
$1.35 billion, respectively. GAPP also requested that funding for the
USAID HIV/AIDS program remain at $330 million.

In addition, ASCP and GAPP urged lawmakers to take steps to protect
these important investments in PEPFAR and the Global Fund, as any
reduction of financial support by the United States at this juncture
could signal retreat from our progress and would likely have
implications on assistance from other international donors as well. The
coalition feels strongly that sustained U.S. investment has the
potential to enable an important “tipping point” in the fight against
HIV/AIDS wherein the annual growth in the number of available treatment
rises above the number of new HIV infections. This would be a critical
step on the path toward an AIDS-free generation.